In the face of increasing calls for help from industry, the federal government promises support, but at the same time lowers expectations. “We will open up a broad rescue package, and we will open it up broadly, so that small and medium-sized companies in particular can fall under this rescue package,” said Economics Minister Robert Habeck in the Bundestag.
Federal Finance Minister Christian Lindner (FDP) made it clear: “There will be precise measures, none that are comparable to the corona pandemic.” Because it is now a supply and not a demand problem. It is also planned to address the causes of rising prices, for example with the planned electricity price brake. Habeck made a similar statement on Tuesday on the “Maischberger” show: “In the case of Corona, politicians decided to assume all the costs. It was enormously expensive. We have not yet made this political decision.”
Energy cost containment program to be expanded
On Thursday, Habeck announced the energy cost containment program, which helps energy- and trade-intensive businesses with grants, would be opened up to small and medium-sized enterprises (SMEs). The stipulation that a company has to do a lot of trading in order to profit should be dropped. Medium-sized companies in particular would benefit from this, it was added from his ministry. The support should not be limited to specific industries, said Habeck. Criteria for benefiting from the aid could be, for example, the proportion of energy costs in the product or in sales.
The program will be limited in time because other instruments are being worked on to stop the price increase and thus relieve the burden on citizens and companies, said Habeck. “So it can’t be a permanent subsidy.” He promised: “We will protect German companies and German medium-sized companies.”
Consumption should be boosted
Habeck emphasized that there was also a demand shock because people with tight budgets consumed less. The government is also working on this so that consumption increases again. For October, he announced a mechanism whereby companies that reduce their production and thus save gas should be financially compensated. “Putin’s attack is also aimed at our economic system,” said Habeck, referring to the Russian president.
Too little, too vague, that’s the criticism from the business world of the traffic light government’s most recent relief package. The President of the Central Association of German Motor Trades (ZDK) complains that the 65 billion package lacks clearly defined aid for small and medium-sized businesses. “The horrendous energy prices eat up the already narrow margins of the car companies.” The car dealerships suffered anyway because there were no vehicles available.
DIHK: “The fear is great”
The Association of German Chambers of Industry and Commerce (DIHK) warned of energy bottlenecks in companies. “Here, the phones are running hot from companies that no longer get any supply contracts, i.e. that no longer get energy from January,” said DIHK general manager Martin Wansleben on Deutschlandfunk. It is important not only to help companies that are in need – but to ensure in advance that there is enough energy. “The fear is great.” In view of the current situation, from Wansleben’s point of view, nuclear energy should not be dispensed with for the time being. “Now we have to play it safe.”
Habeck wants to keep two of the three remaining nuclear power plants operational as an emergency reserve by mid-April. In the course of the nuclear phase-out, all German nuclear power plants should have been finally shut down at the end of this year. FDP and Union are pushing for all three power plants to continue operating.
Stefan Körzell, member of the board of the German Trade Union Confederation (DGB), welcomed the planned expansion of economic aid. “However, it must be avoided that companies that receive tax money then migrate from Germany and relocate jobs abroad.” The DGB insisted on combining state aid with clear agreements, for example on job security and collective agreements.
Economic institute predicts recession
According to the autumn forecast by the Kiel Institute for the World Economy (IfW), high energy prices will push Germany into recession. In the coming year, the gross domestic product is expected to fall by 0.7 percent, the IfW Kiel announced. The institute thus lowered its previous forecast by 4 percentage points. In the current year there should still be an increase of 1.4 percent. For 2024, the IfW Kiel expects GDP growth of 1.7 percent again. With the high import prices for energy, an economic avalanche is rolling towards Germany, predicted the Vice President and Economics Director of the IfW Kiel, Stefan Kooths. “Especially energy-intensive productions and consumer-related economic sectors are hit with force.”
As in the Corona crisis, the federal government wants to counter the Russian crisis with aid programs, which, according to the decision of the coalition committee on Sunday, will initially be extended until the end of the year. The KfW development bank, for example, helps companies to obtain low-interest loans that are suffering sales declines, production losses or closures due to the Ukraine war or are affected by increased energy costs. The federal government also provides guarantees totaling up to EUR 100 billion via KfW for companies that trade in electricity, natural gas or rights to emit greenhouse gases on futures exchanges.
Industrial sectors that consume a lot of energy or trade can get money through the energy cost containment program, which has been estimated at 5 billion euros so far, and which Habeck now wants to expand. It is intended to specifically help companies that cannot pass on the sharp rise in energy costs to their customers due to international competition. According to the Ministry of Economic Affairs, both medium-sized and large companies will benefit from this. According to this, companies can receive up to 50 million euros in subsidies for increased energy and electricity costs. A total volume of up to 5 billion euros is planned here.
